To Be or Not To Be

Critical questions loom over importers as 2007 nears the end

To all business owners and senior management: The first six months of 2007 have already passed; the critical question is whether you will continue to exist for the balance of 2007. Have you made both your sales revenue and bottom-line profit as planned for the first six months?

Indeed, several questions remain: Are you going to give excuses about labor turnover; about very low prices you accepted for orders; about your No. 1 customer being sold or deciding to source elsewhere and cancelling all of your orders; or about the monsoons, hurricanes, floods, global-warming issues, bad roads, charge-backs due to late delivery, incorrect import/export documentation, power failures, not scheduling properly for your employees’ cultural holidays, etc.? I have heard most, if not all, of these excuses in the past 50 years that I have been in international trade. This entire scenario means that you were not watching your business properly, not making necessary changes to your plans and not being “hands on” in your ownership or senior management position.

Leadership carries many responsibilities. But simply put, it is your responsibility to obtain the facts, monitor and change the plans, properly manage the execution and set up the necessary systems to supervise all areas of the business.

To be the owner or chief executive officer of a textile or apparel business has become a very complex and difficult position in these times. It includes being a politician, a diplomat, a lawyer, an accountant, a logistics expert and a financial planner.

There are several mind-boggling events that can make a manufacturer or retailer wonder whether the return on investment is worth the risk.

The closure and/or consolidation of many U.S. retailers and manufacturers, the continuance of safeguard quotas on China, the anti-dumping of certain textile/apparel categories from Vietnam, the failure of the WTO to even meet subsidy issues, labor compliance and many other bilateral issues, and protective high import tariffs are just some of the issues at the forefront of survival for apparel makers.

To cover all that has taken place from Jan. 1, 2007, through June 2007, I would need to publish an almanac.

But a few highlights:

bull; The new U.S. Congress is adding many new requirements to already negotiated free-trade agreements. (These issues are still pending.)

bull; The new U.S. Congress most likely will not give President Bush fast-track authority. (This issue is still pending.)

bull; The Port of Los Angeles and Port of Long Beach, which handle 44 percent of all goods imported into the United States, have new regulations on truckers and security passes that could eliminate an estimated 40 percent or more of the trucks hauling containers to their destination. A huge slowdown is predicted.

bull; Many big-box retailers, facing local opposition, are not getting permits to build their stores in large cities and in some rural locations.

One way or another, it will affect your business globally. There is nothing as permanent as change—and it is now coming much faster and from arenas that normally affect only the “big boys” on the block. Consolidation in all areas of finance, manufacturing and retail has now made it very difficult for a business to grow roots that can weather the good and the bad times. Our government sneezes on a textile/apparel issue, and it can cause pneumonia worldwide.

Let us remember that textile/apparel manufacturing is still the most desirable industry for so-called third-world countries to begin to have economic growth. The threat of terrorism has put many desirable locations “at risk”—and therefore no longer desirable sourcing areas.

We may have very opportunistic, low-interest investment monies available for borrowing, but the risk, compared to the return on investment, is changing rapidly. You have to invest in factual information.

You must invest in professional systems and in the most important people (your staff) to make your plans succeed. You can put your head in the sand like the proverbial ostrich or you can look around and make the changes necessary to exist.

Most important, you have to get up every morning and enjoy the challenge of running a company, solving problems, and making decisions, and you also must be the one who is willing to sacrifice.

This brings us to the subject of huge employment compensation packages. Rather than stabilizing leadership, as they were intended, for many companies they have become liabilities. In these companies, the leader makes the mistakes and takes all of the rewards, while the employees and shareholders take the losses.

Each of you must make a complete study of your business daily and make the best decisions—not all of which will be correct.

You must evaluate your decisions on the simple question of “To be or not to be?”—or, perhaps more accurately, “To exist or not to exist?”—and identify the real consequences your decisions will have on your employees, your customers and your suppliers—and not just what will happen to you.